The Dow failed to OPEN above the 2017 Intraday high so we are not yet ready for prime time. This is still a 0ff-Broadway play, but we are getting closer. The dollar still finished neutral so it too is not yet ready for its move higher. Gold closed in a positive position for the end of 2017 confirming the posture in the dollar.
We will review all the world markets for 2018 in the coming Outlook Report for 2018.
Property values are starting to crash hard in Sydney Australia, New Zealand, and London. Politicians are simply idiots. They all targeted foreigners buying property as the leading cause for the rise in housing prices. What they failed to grasp is that people spend more money when they THINK they have equity in their home. Whenever housing starts to decline, so does consumer spending and guess what – you get the economi9c downturn. Dah!
QUESTION: What is your opinion of Elon Musk and Mark Zuckerberg idea of universal income?
ANSWER: The idea of free money being touted by Elon Musk and Mark Zuckerberg only demonstrates that they know nothing about humanity or economics. They see universal free money as a cushion for workers whose jobs might be replaced by automation or robots. They argue that free money could provide workers with the flexibility to retrain for a new career, pursue creative interests, or start their own business.
If we are talking about a temporary benefit during a retraining period, then that is an entirely different idea from a universal basic income guarantee. You can drive down the streets in New Jersey and you see hand-made signs posted that they pay cash for diabetes medical material handed out free by the government. They also sell food stamps. You cannot change humanity. Some people will obey the rules and others will circumvent them.
The last thing you want to do in society is provide to the population some sort of guaranteed income where people can stay home and do nothing. This will foster the same hatred of anyone who works and has more than they do and it will promote hatred and class warfare.
When the automobile was invented, that displaced people who were carpenters making wagons. When the Dust Bow hit during the Great Depression, it added to the displacement of farmers. The tractors replaced people tilling the soil just as the cotton gin replace slave labor in the South. Technology will always replace workers and the greater the tax burden, the greater the incentive to replace workers.
Neither Elon Musk nor Mark Zuckerberg has any clue about economic history for if they did, they would understand that technology always advances and displaces segments of the workforce. This is also one reason governments like war to thin the herd when unemployment rises.
Providing free money is actually an experiment in Finland. It began one year ago taking 2,000 unemployed Finns who were randomly selected from across the country for a trial testing universal basic income. Each month for two years they would receive €560 euros from the government, tax-free. They can spend the money however they decide. The plus of this program is the reduction in bureaucracy. As I said, the US government hands out food stamps but people sell them. From an economic standpoint, this system is less costly than the current one in play with bureaucrats determining what they will allow people to have or not. The full report on the Finland experiment will not be issued until the 2-year program is complete after January 1st, 2019.
Published on May 11, 2017
The rally in BitCoin was a perfect 13 weeks up from the last strategic low. It peaked with the Weekly Array the week of 12/18 which was both a Panic Cycle and a Directional Change. However, with the impending ban in South Korea on trading cryptocurrencies, the high of December appears to be at least an important temporary high. A weekly closing back below 9425 will ten to confirm the end of the bull market for now.
South Korean plans to restrict cryptocurrency trading. Bitcoin investors saw the collapse to $13,600 from the previous day trading at $16,500 dollars. South Korea, one of the world’s most important countries for virtual currency trading, wants to ban the opening of anonymous accounts for cyber currencies, among other things. There will also be a new law that will allow regulators to close stock exchanges where Bitcoin & Co. is traded under certain circumstances. “We share the view that cryptocurrency trading is irrationally overheating,” the government said. “We can no longer tolerate this abnormal speculation.”
Nearly a million people are estimated to own Bitcoin. South Korea is very important because it represents around one-fifth of Bitcoin’s global trade. Regulation by South Korea is extremely important. Even the German financial supervision warns that the risk is total loss for investors. Many view this as if it were the Dutch Tulip Bubble since BitCoin cannot be used in the economy in a fair and orderly manner.
COMMENT: Mr. Armstrong; I really do not think the world respects your work. I read on your blog there was going to be a bad flu from Australia that would hit Britain. Then a few days later, the headline here is all about what you forecast. You really have to go public and let people support your work in a meaningful way. The world really does need to listen.
All the best from your former home.
EB
REPLY: I understand. I get a lot of emails on this subject. The world is not ready to understand cycles. All the methods of analysis are generally wrong. All the analysts who try to compete with me do so on an OPINION basis, not methodology. They offer their OPINION and pound their chest. This is not about OPINION. This is about global correlation. We all have opinions and they are never 100% perfect. There have been times my personal “opinion” has been proven wrong by Socrates. This is why I always try to make sure “opinion” is separates from a forecast.
How many times have we heard some food is bad for you and then they reverse it a decade later? The standard method of analysis is always trying to reduce everything to a single cause of action. That methodology is lethal to knowledge and the future. It blocks our advancement in every field of science like Global Warming. Let’s see, it has gotten warmer in the past 25 years so that must be because of cars. They start with that assumption and never test the data before 1850 because there were no cars then. Why bother? We know the cause is cars, they say. So look for data to prove the assumption.
This to me is absurd. You can also say everyone who has ever eaten a carrot had eventually died and that means carrots must be long-term deadly. It was assumed that illness was in the blood. So the logical conclusion was to bleed people. If they died, it was never because they took too much blood, but they did not bleed them soon enough.
I just am tired of beating my head against a brick wall. Society has to break and only then will we look to new dynamic interconnectivity that is the path to understanding. There are those in New York City who just cannot stand what I do. They refuse to consider there is a methodology at issue here and prefer to blame me the messenger claiming I have too much “influence” and that is why they are wrong. They would try to kill me if they could since they tried that one before but I survived. Why admit you may be wrong when you can blame someone else for your failures? That, unfortunately, infects a large part of humanity.
Going public is the only way to preserve this research and push it forward for posterity. I have not changed my mind. We were granted our business license in China. It took three years of investigation and that is by no means an easy accomplishment. So we now have the seal of approval from China and that will be the biggest market the other side of 2032. Now we are getting closer to going public
QUESTION: Mr. Armstrong; Did AIG use the Black-Scholes Model and that is what created the crisis again in 2007?
WJ
ANSWER: No. It’s my understanding that AIG developed different models, they called a “Value-at-Risk Model,” (VaR) which used a binomial-expansion-technique to start valuing their positions. I believe the original model was developed at Moody’s. However, like the Black-Scholes Model, it too lacked depth. In model development, it is extremely complex.
Virtually every model created tends to be predominately flat with a minimum of dynamic variables lacking understanding of TIME. Then the testing period lacks the database reflecting all conditions. In the case of Black-Scholes, they back-tested only with data to 1971. If I created a model with only data from 2009 forward, then it would be biased to presume a bull market is normal in the stock market.
The Value at risk (VaR) model is a measure of the risk of investments. It estimates how much a set of investments might lose, given normal market conditions, in a set time period such as a day. VaR is typically used by firms and regulators in the financial industry to gauge the number of assets needed to cover possible losses. It obviously failed in 2007-2009 because once again it was not a “normal market condition” for it fails utterly to understand CONTAGION when sound assets are sold to raise cash for other assets that collapse. The assumption of the model is its own nemesis.
For example, if a portfolio of stocks has a one-day 5% VaR of $10 million, this actually means that there is a 5% probability that the portfolio will fall in value by more than $1o million over a one-day period if there is no trading. Therefore, a loss of $1o million or more on this portfolio would be expected on 1 day out of 20 days given a 5% probability. A loss which exceeds the VaR threshold is termed a “VaR breach“.
So you can see, such models are incapable of determining TIME and as a result, they will always fail during a CONTAGION that they cannot see coming.
This is why the bulk of portfolio models fails during a financial crisis. This is also why some of the top Institutional portfolios come to our firm because they have realized that only TIME determines the success of any model and making broad assumptions of probability have ALWAYS failed. If you cannot model TIME and CONTAGION, you will be wiped out during a crisis and VaR will fail just as Black-Sholes.
COMMENT: Two things:
“He is remembered for publicly stating that Israel should be wiped off the face of the Earth.”
Although he is indeed remembered in the West for ‘saying’ that, the truth is that phrase was a gross mis-translation of what he did say in Farsi. Just a simple lie. I don’t think you should be party to the perpetuation of a lie.
And, with Pahlevi, his ‘claim’ to the throne was problematic. His father was not an aristocrat and in fact was installed by the British. Real granular knowledge of history is useful, don’t you think?
REPLY: My piece on Iran does not support either side. I am fully aware that I am well read in Iran. The question was simply about the cycle of political change. That does not endorse the claim to the Throne under Mohammad Reza’s reign, marked the anniversary of 2,500 years of continuous Persian monarchy since the founding of the Achaemenid Empire by Cyrus the Great. That took place on the 12–16 of October back in 1971.
He revised the calendar making the benchmark the beginning of the First Persian Empire, measured from Cyrus the Great’s coronation. He introduced the White Revolution, which a series of economic, social and political reforms designed to transform Iran into a modern global power. He offended the religious conservatives by granting women suffrage.
I fully appreciate his claim to the throne is disputed and he was only the second of the House of Pahlavi and thus the conservatives dispute his heritage to the throne. That is not my concern. Like Trump, our model forecast the 2016 election back in 1985. Trump appeared and read the people’s discontent and beat 17 Republicans to their shock. It was not Trump the person, it was just being there at the right time. If it was not Trump, it would have been someone else. The cycle was turning – plain and simple.
There is a 26-year cycle that is quite dominant throughout Iranian history. There have been many revolutions that have often centered even on religion. The Sassanid Shâhs (Great Kings), 223/4-651 AD is a classic example. The Sassanids replaced the Hellenophile Parthian dynasty, with the program of deliberately reviving the Zoroastrian Achaemenid Persian Empire, aspiring to recover all the former provinces of the Achaemenids (Egypt, Syria, Anatolia). Zoroaster was the predecessor to Christianity and the source of the story of the Three Wise Men.
Zoroaster was a prophet whose teachings were the religious foundation of ancient Iranian-speaking peoples. This became the religion of Zoroastrianism, which is often considered to be the first world religion. It is still practiced by a tiny population. There are approximately 11,000 Zoroastrians who live in the United States, 6,000 in Canada, 5,000 in England, 2,700 in Australia and 2,200 in the Middle East. Mumbai, formerly known as Bombay, was actually the world capital of Zoroastrianism. The Sasanian Revolution was all about restoring the old religion. The 1979 Islamic Revolution was similar in overthrowing the Shah to reestatlish an Islamic State.
From that birth of the Sasanian Kingdom in 223/224BC, the 26-year cycle brings us precisely to 2017/2018 (cycle #69 from that revolution). Hence, I am looking at this less from a political standpoint of supporting either side in Iran, where we have a lot of readers I know, but from a purely cyclical viewpoint.
I have no interest in promoting any religion for that to me is a personal choice
QUESTION: Marty; At your training seminar you did a couple of year’s ago, you said your pivot numbers will confirm or deny a high. What was the status on the Pivots in the Dow for the close?
PS Another training session would be nice.
GD
ANSWER: The 2006 closing was 12463.15 and the Pivots were 10949.43, 10727.38, and 14234.29. We closed above two and below one leaving the market still bullish looking to higher prices. Then 2007 closed at 13264.82 and now it was below two 13836.74, 10727.38, and 14234.29. The high for that year came in at 14198.10. So we closed under two and above the lowest which indicated it was then turning bearish into 2008.
The 2017 Pivots were 21982.03, 1528.79, and 22282.07 with the closing coming in at 24719.22. Here we closed above all three Pivots indicating it is still long-term bullish. Looking at 2018, the Pivots move to 20202.77, 27434.90 and 28054.53.
We warned back in October 2014: “[W]e are looking at a rally into 2017-2018 with the Dow reaching the 25,000-28,000 level. ”
We can see that we have reached the beginning of our Pivot projections made 10 years ago for this time period. This suggests CAUTION and with our volatility models turning up and a Panic Cycle for 2018, this is not going to be a walk in the park. This will take a lot of skill to trade this one. No emotions and no preconceived expectations. We have to play this by the numbers and cycles – no choice. This is not the time for boasting opinions.
If I have time to do a training session again I will let everyone know. The seat price of $5,000 last time because it is a lot of work and we have to keep the audience in a more intimate session.
It looks like the Iranian Green Revolution is back on the streets as waves of protests are happening. In 2009 the Mullah’s brutally cracked down on the reformers and President Obama stood by. In 2017 the reformers have an ally in the oval office as President Trump and his entire administration (specifically Rex Tillerson and Nikki Haley) openly show their support for the movement. Stunning developments.
The U.S. Media are attempting to spin the protests as “pro-regime” and claiming the supporters are pro-Khameni and pro government. That narrative is 100% false, yet it highlights the severity of the entire left-wing media apparatus as they attempt to prop-up the failed policies of the Obama administration.
Tens-of-thousands of Iranians have taken to the streets to express their anger, and unfortunately for the preferred media script that anger is not directed at President Trump or Saudi Arabia; but rather at the mullahs and their oppressive security forces.
The protests may have begun over economic grievances in the northeastern city of Mashhad. However, the uprising has grown to at least 18 cities nationwide. The slogals are no longer about corruption and economics, they are directly confronting the Islamic Republic:
“Death to [Supreme Leader Ali] Khamenei!”
“Death to Hezbollah!”
“Not Gaza, Not Lebanon, Our Life Only for Iran!”
“We Will Die to Get Our Iran Back!”
“Clerics Out of Our Country!”
President Trump Tweeted his prior statements from the U.N. General Assembly about Iran and the hopes for the people of Iran. U.S. Ambassador to the U.N., Nikki Haley, also is transmitting support for the reformers along with Secretary of State Rex Tillerson.
The reformers and protesters face a brutal Iranian regime that spends most of its time trying to retain itself and will not hesitate to crack down, just as it did in 1999 and 2009.
Perhaps the difference now is they have the support of U.S. President Donald Trump, and it is likely our western propaganda media will not be able to hide the truth much longer.
I have created this site to help people have fun in the kitchen. I write about enjoying life both in and out of my kitchen. Life is short! Make the most of it and enjoy!
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